She explained that in the past the state has paid for 60 percent of the union workers' health payments. The new health fund does not require the state to keep the same ratio, but Lingle said she promised unions during her campaign that she would preserve the 60-40 ratio.

"If we continue to provide the same benefits to employees, with no additional costs to employees, that is just over a 2 percent increased cost to taxpayers," Lingle said.

The offer was made to the Hawaii Government Employees Association, the Hawaii State Teachers Association, the United Public Workers and the University of Hawaii Professional Assembly, Lingle said.

Those unions can strike and are now bargaining with the state for a new contract.

Other state and county unions covering police, firefighters, prison guards and public health nurses have a different way of negotiating labor contracts.

Those unions are not allowed to strike, so the management and union proposals are submitted to an arbitrator, who then picks either the state or union proposal.

Lingle said "it would be safe to assume" that she would be offering some pay increase to the public unions in that arbitrated settlement process.

The new health fund plan may result in increased payments, but Lingle said the state can afford it.

John Radcliffe, associate director of UHPA, who was also on the board that negotiated the new health fund package, praised Lingle for agreeing to pay for increases.

"I think that is wonderful news," Radcliffe said.

But another union leader, Karen Ginoza, president of the HSTA, said the teachers' increased health payments are too large to be picked up entirely by the state.

"Yes, they (state) have said they would pick up part of it; the state has proposed that they will pay more of it, but the payment is still much higher and it will be a tremendous increase for our teachers," Ginoza said.

Neither Lingle nor the unions had specific costs for their health fund increases.